Gtech SpA has agreed to purchase in cash and stock International Game Technology for the amount of $4.7 billion. This deal unites the largest provider in the world of lottery systems with the largest maker of slot-machines.
Gtech in the deal will pay out $18.25 for every share of IGT, which is based in Las Vegas, or $13.69 in cash and 0.1218 shares in the new holding company, said the Italian company in a prepared statement on Wednesday.
The price is equal to 18% more than the last IGT closing price that was $15.50. The full value of the transaction is $6.4 billion including $1.75 billion in existing debt IGT holds, said Gtech.
The deal will make Gtech, based in Italy, a much bigger player in the $430 billion worldwide gambling business during a time when industry wide businesses are grappling with less growth, competition from consolidation and Web gaming.
Gtech resulted from a merger with Italy’s state-run lottery operator Lottomatica in 2006. This transaction is the biggest ever for Gtech.
Shares of IGT were up by 8.5% in early morning trading in New York to reach $16.82, while Gtech was up 4% in Milan to 19.18 euros.
The holding company formed by the acquisition will be UK based and have its operating headquarters out of Rome, Providence, Rhode Island and Las Vegas, said the Gtech statement.
The new business would have over $6 billion of revenue and over $2 billion of earnings prior to taxes, interest, amortization and depreciation, assuming a rate of exchange of currency of $1.36 per each euro.
The company expects to increase sales in its social gambling sector, which brings together players on platforms like Facebook and on other types of mobile devices.
Shareholders of both companies must approve the acquisition and that should be completed before the end of the second quarter of 2015.
Current shareholders of Gtech will be owners of 80% of the new holding company, while shareholders of IGT will have the remainder.
The deal was already approved by both boards and will be subject to approval by antitrust and other regulatory agencies.